Express Scripts 2013 Annual Report Download - page 31

31 Express Scripts 2013 Annual Report
Item 3 – Legal Proceedings
We and/or our subsidiaries are defendants in a number of lawsuits. We cannot ascertain with any certainty at this
time the monetary damages or injunctive relief that any of the plaintiffs may recover. We also cannot provide any assurance that
the outcome of any of these matters, or some number of them in the aggregate, will not be materially adverse to our financial
condition, results of operations, cash flows or business prospects. In addition, the expenses of defending these cases may have a
material adverse effect on our financial results.
These matters are:
• Multi-District Litigation - On April 29, 2005, the Judicial Panel on Multi-District Litigation transferred a number of
previously disclosed cases to the Eastern District of Missouri for coordinated or consolidated pretrial proceedings,
including the following remaining cases: Lynch v. National Prescription Administrators, et al. (United States District
Court for the Southern District of New York, Case No. 03 CV 1303) (filed February 26, 2003); Wagner et al. v.
Express Scripts (United States District Court for the Southern District of New York, Case No.04cv01018 (WHP))
(filed December 31, 2003); Scheuerman, et al v. Express Scripts (United States District Court for the Southern District
of New York, Case No.04-CV-0626 (FIS) (RFT)) (filed April 27, 2004); Correction Officers’ Benevolent Association
of the City of New York, et al. v. Express Scripts, Inc. (United States District Court for the Southern District of New
York, Case No.04-Civ-7098 (WHP)) (filed August 5, 2004); 1978 Retired Construction Workers Benefit Plan (Nagle)
v. Express Scripts, Inc. (United States District Court for the Eastern District of Missouri, Civil Action No. 4:06-
CV01156) (filed August 1, 2006); Fulton Fish Market Welfare Fund (Circillo) v. Express Scripts, Inc. (United States
District Court for the Eastern District of Missouri, Civil Action No. 4:06-cv-01458) (filed October 3, 2006);
Philadelphia Corporation for the Aging v. Benecard Services, Inc., et al. (United States District Court for the Eastern
District of Pennsylvania, Civil Action No. 06CV2331) (filed June 2, 2006); Local 153 Health Fund, et al. v. Express
Scripts Inc. and ESI Mail Pharmacy Service, Inc. (United States District Court for the Eastern District of Missouri,
Case No.B05-1004036) (filed May 27, 2005); and Brynien, et al. v. Express Scripts, Inc. and ESI Mail Services, Inc.
(United States District Court for the Northern District of New York, Case No. 1:08-cv-323) (filed February 18, 2008).
Under these cases, the plaintiffs assert that certain of the business practices of Express Scripts, Inc. and its subsidiaries
(for purposes of this Item 3,“ESI”), including those relating to ESI’s contracts with pharmaceutical manufacturers for
retrospective discounts on pharmaceuticals and those related to ESI’s retail pharmacy network contracts, constitute
violations of various legal obligations including fiduciary duties under ERISA, common law fiduciary duties, state
common law, state consumer protection statutes, breach of contract, and deceptive trade practices. The putative
classes consist of both ERISA and non-ERISA health benefit plans as well as beneficiaries. The various complaints
seek money damages and injunctive relief. On July 30, 2008, the plaintiffs’ motion for class certification of certain of
the ERISA plans for which we were the PBM was denied by the court in its entirety. Additionally, ESI’s motion for
partial summary judgment on the issue of our ERISA fiduciary status was granted in part in Minshew v. Express
Scripts, Inc., et al. (United States District Court for the Eastern District of Missouri, No. 4:02-cv-1503-HEA) (filed
December 12, 2001), which was subsequently dismissed on July 21, 2011. The court found that ESI was not an
ERISA fiduciary with respect to MAC (generic drug) pricing, selecting the source for AWP (Average Wholesale
Price) pricing, establishing formularies and negotiating rebates, or interest earned on rebates before the payment of
the contracted client share. The court, in partially granting plaintiffs’ motion for summary judgment, found that ESI
was an ERISA fiduciary only with respect to the calculation of certain amounts due to clients under a therapeutic
substitution program that is no longer in effect. On December 18, 2009, ESI filed a motion for partial summary
judgment on the remaining ERISA claims and breach of contract claims on the cases brought against ESI on behalf of
ERISA plans. On February 16, 2010, in accordance with the schedule under the case management order, plaintiffs in
the Correction Officers and Lynch matters filed a motion for summary judgment alleging that National Prescription
Administrators (NPA) was a fiduciary to the plaintiffs and breached its fiduciary duty. Plaintiffs also filed a class
certification motion on behalf of self-funded non-ERISA plans residing in New York, New Jersey, and Pennsylvania
for which NPA was the PBM and which used the NPASelect Formulary from January 1, 1996 through April 13, 2002.
On July 2, 2010, ESI filed a motion for partial summary judgment as to certain non-ERISA claims being made in
various cases. On January 28, 2011, NPA filed a cross motion for summary judgment seeking a ruling that it was not a
fiduciary under common law. We are awaiting the court’s ruling on these pending motions. Settlement was reached in
Fulton Fish, Philadelphia Corporation, and 1978 Retired Construction Workers and these cases were dismissed on
August 15, 2013.
• Jerry Beeman, et al. v. Caremark, et al. (United States District Court for the Central District of California, Case
No.021327) (filed December 12, 2002). A complaint was filed against ESI and NextRX LLC f/k/a Anthem
Prescription Management LLC and several other pharmacy benefit management companies by several California
pharmacies as a putative class action, alleging rights to sue as a private attorney general under California law.